Even once it is declared, a common stock dividend does not become a legal financial obligation of the firm.

Common Stock Dividend

Payments made to shareholders out of a company's earnings, reflecting a portion of the profit allocated for each share of common stock.

Legal Financial Obligation

A requirement to pay money as determined by a legal process or by law.

Declared

Pertains to a dividend or other distribution officially announced by a company's board of directors to be paid to shareholders.